Allocating marketing resources over social networks: A long-term analysis

TL;DR

This paper analyzes how competing marketers influence consumer opinions in social networks over time, showing that despite competition, the network tends to reach consensus and proposing a cooperative marketing strategy that outperforms non-cooperative approaches.

Contribution

It introduces a long-term dynamic model of marketing influence in social networks and proposes a coopetition strategy that Pareto-dominates Nash equilibrium strategies.

Findings

Network reaches consensus despite competition

Coopetition strategy Pareto-dominates Nash equilibrium

Consumers' opinions influenced by both neighbors and external campaigns

Abstract

In this paper, we consider a network of consumers who are under the combined influence of their neighbors and external influencing entities (the marketers). The consumers' opinion follows a hybrid dynamics whose opinion jumps are due to the marketing campaigns. By using the relevant static game model proposed recently in [1], we prove that although the marketers are in competition and therefore create tension in the network, the network reaches a consensus. Exploiting this key result, we propose a coopetition marketing strategy which combines the one-shot Nash equilibrium actions and a policy of no advertising. Under reasonable sufficient conditions, it is proved that the proposed coopetition strategy profile Pareto-dominates the one-shot Nash equilibrium strategy. This is a very encouraging result to tackle the much more challenging problem of designing Pareto-optimal and equilibrium strategies for the considered dynamical marketing game.